Thanks for the further explanation.
Manually creating groups is a non-starter:
1. I have 460 students. Group'ing them is not exactly a task that should be done by an error-prone and time-strapped human being.
2. These groups are externally defined for a reason - they correspond to exam schedules, lab schedules, seating plans, etc.
Defining these manually is thus bad design for our use case, even if I could do it error free by some miracle.
I will not, and wish not to tamper with the creation of groups myself. What I need is sub-groups that I can manually create out of these predefined groups. It does not look like Moodle can do that.
Please correct me if I am wrong.